Slovakia still tops in per capita car production

SLOVAKIA remains to be the world leader in car production per capita and planned investments and the launch of new models mean it is likely to keep this position. Moreover, another carmaker, Britain’s Jaguar Land Rover looks to be considering a new investment.

“Slovakia ranks first with the production of 183 cars per 1,000 citizens,” wrote UniCredit Bank Czech Republic and Slovakia in its memo when it calculated the ranking of countries in production of passenger cars based on preliminary data of the International Organization of Motor Vehicle Manufacturers (OICA) for 2014. The Czech Republic followed second with 118 cars per 1,000 citizens.

Slovakia’s three carmakers – Kia Motors Slovakia, PSA Peugeot Citroën, and Volkswagen Slovakia - made 973,370 cars in 2014, a decrease of 14,348 cars compared with 987,718 cars manufactured in 2013. While Kia and PSA revealed last year’s results already in January, the Slovak arm of German carmaker Volkswagen did so only in mid March.

Volkswagen Slovakia (VW SK) manufactured a total of 394,474 automobiles in 2014, a drop from 426,313 manufactured in 2013. The carmaker ascribed the drop to the launch of new productions as well as the volatile car market when the decline of car sales on some markets including Russia affected also car production in Bratislava.

Read also:

Kia Motors Slovakia near Žilina produced 323,720 cars, up nearly 3.5 percent and PSA Peugeot Citroën in Trnava increased its production by 2.7 percent to 255,176 cars, a new record.

New models to boost production

All three carmakers introduced novelties at the annual Geneva International Motor Show held March 5-15, hoping that new or improved models would boost car sales and production.

“The year 2015 will be a challenge for Volkswagen Slovakia,” Albrecht Reimold, the president of the board of directors of VW SK said at a press conference on March 16. “We are starting production of the new Audi Q7. Thus we will become the plant which as the first one in the world will start manufacturing a diesel-driven plug-in hybrid car – the Audi Q7 e-tron.”

VW SK is also preparing for production of bodies for the new Bentley Bentayga SUV expected to be launched on the market in early 2016 while the Bratislava plant will, as of late 2017, also assemble the Porsche Cayenne. While VW SK has previously manufactured several of its parts, final assembly has been done in Leipzig.

VW SK plans to invest €1.5 billion between 2012 and 2016 while investments between 2012 and 2014 amounted to €939.3 million.

“Out of all Peugeot 208 cars, 90 percent are manufactured in Trnava,” Peugeot Slovakia spokeswoman Ivana Orviská told Pravda, adding that the remaining 10 percent are manufactured in the French town of Poissy.

Peter Švec, spokesman for PSA Peugeot Citroën, specified that the Trnava-based carmaker introduced two new things in Geneva when the second one is the two-toned body with the technology designed by technicians from the Trnava plant, offered under the Black Top brand. Clients can choose the roof and covers of driving mirrors in black in combination with one of three colour tones for the body.

But the biggest new thing in Trnava is that the plant should manufacture a Citroën’s crossover model which should replace the production of the Citroën C3 Picasso, the Pravda daily wrote. While total investments into the new model are calculated at €300 million, €80 million of it should go to Trnava.

Originally the carmaker planned to make the announcement in a ceremonial way with presence of Prime Minister Robert Fico on March 6, but Fico was unable to attend.

Nevertheless, even plans for production of a new model and thus actually guarantees that the carmaker would keep its labour force, have not calmed down the tense situation in the plant and trade unions are threatening to strike if they do not receive a pay raise.

Unions have asked for a 9-percent salary hike, but the company’s management has thus far refused. They proposed the one-off contribution to the employees instead, which was rejected by the trade unions. The negotiations are now led by a mediator.

Two years ago the company management agreed with employees on a 24-month salary freeze, because of lower production, for the years 2013 and 2014. The third shift was preserved even though production was below the plant’s annual production of capacity of 300,000 cars.

This March several employees, mostly working on the lines, told the MY Trnavské Noviny regional weekly that the working conditions are not good.

“People work a lot and in a tempo which is unthinkable in France,” one of the employees said, adding they have to work also on Saturdays. “And than they learn that they will pay €1,000 as a bonus in France.”

Korean-owned Kia Motors Slovakia, which produces cars in Teplička nad Váhom near Žilina, unveiled the sport line of its cee’d models under the GT Line brand in Geneva.

“We will manufacture it in three body versions,” said Jozef Bačé, spokesman for Kia Motors Slovakia.

Fourth carmaker?

While car market watchers rather see space in Slovakia for more auto subcontractors, media have reported about the carmaker Jaguar Land Rover considering opening a new plant.

“They are addressing construction companies for potential designs for their premises,” an anonymous source told the Hospodárske noviny economic daily. “They are deciding between Slovakia, Poland, the Czech Republic and Hungary,” he added.

The question remains, however, whether this will be a logistics warehouse, additional production site, or even a plant for car production. Several things hint that the second option is more probable. Owned by India’s Tata Motors, the company is building at full capacity and needs to expand.

Jaguar Land Rover officials did not comment for Hospodárske Noviny, but Slovak analysts point out that this region is a logical choice, due to low costs, developed network of suppliers, flexible and highly motivated labour, along with the country’s growth potential and other factors.